Optimistic Stats Hide Deeper Debt Problems

In its May 2012 Plastic Safety Net survey, research and advocacy company Demos surveyed 997 low- and middle-income American households that carried credit card debt for three months or more — and looked at how the recession and the Credit CARD Act of 2009 have affected American households.

Average consumer credit card debt totaled $7,145, down from $9,887 in 2008, Demos found. That echoes the optimistic numbers from the New York Federal Reserve’s latest Household Debt and Credit report — which found that consumer debt fell 0.9 percent, mortgage balances dropped by 1 percent and balances on home equity lines of credit fell 2.4 percent in the final quarter of 2011.

Demos also found that the CARD Act seems to be working — for some. It’s doing what it’s intended to do, according to the study, which is to reduce fees and help people understand statements and pay down their balances faster. Fewer people made late payments, and those who did were a lot less likely to see their interest rate increase as a result.

The study also found over-the-limit fees had been virtually eliminated by the CARD Act and that the elimination of those fees really benefited certain minority groups — African-Americans and Latinos primarily.